The world’s largest retailer, Walmart (NYSE:WMT), took a cautious stance with its holiday hiring. WMT plans to add 40,000 associates in seasonal and full-time roles for the holiday season and beyond. This is well below the 150,000 associates that it added last year. Walmart’s limited hiring is indicative of a dismal holiday season for retailers.
Notably, higher food inflation increased energy prices, and an uncertain macro environment is impacting consumer spending patterns (customers’ spending on necessities and not buying items at higher price points) and taking a toll on retailers. Moreover, the tight labor market and supply shortages further remain a drag. This has forced retailers to offer markdowns to clear inventory, which in turn is affecting their margins.
Is Walmart a Buy or Sell?
Despite near-term headwinds, Wall Street is optimistic about Walmart’s prospects. WMT stock has received 22 Buys and seven Holds for a Strong Buy consensus rating. Further, WMT’s average price target of $151.72 implies upside potential of 12.6%.
Other than analysts, WMT stock has a positive signal from hedge fund managers, who added 2.7M shares last quarter. WMT stock has an Outperform Smart Score of nine out of 10 on TipRanks.
Bottom Line
WMT’s hiring plans show that the retailer remains cautious about the upcoming holiday sales. Though its sales and margins remain under pressure, its recent initiatives to clear excess inventory and pricing action to support profitability bode well for growth. Further, its increased e-commerce penetration and demand for its private brands are positives.
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